Question 1

Continuous disclosure requires companies to notify the ASX of any confidential information that a reasonable person would expect to have a material effect on the price of the securities of that entity.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following was not one of the corporate governance deficiencies that contributed to the collapse of ABC Learning Centres Ltd?

Accepted Answer

A)  A dominant CEO.
B)  Poor board processes.
C)  Failure of the board to understand the company's strategy.
D)  Failure of the board to increase the CEO's remuneration.

Question 3

Which of the following statements do not apply to hard regulation?

Accepted Answer

A)  Hard regulation is also known as black-letter law.
B)  Hard regulation comprises legally binding obligations.
C)  The Corporations Act is an example of hard regulation.
D)  Voluntary industry codes of conduct are a form of hard regulation.

Question 4

Under the insider trading provisions of the Corporations Act,persons are prohibited from communicating information that is likely to have a material effect on a company's share price to anyone they think will deal in the company's shares.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statement is incorrect?

Accepted Answer

A)  Section 299A of the Corporation Act can be used to compel specific environmental and social disclosures.
B)  The Carbon Disclosure Project will result in the mandatory introduction of carbon emission reporting.
C)  The National Greenhouse and Energy Reporting System is an example of a scheme encouraging the disclosure of aspects of environmental performance.
D)  Sustainability involves ensuring that development meets the needs of the present without compromising the ability to meet future needs.

Question 6

The German system of corporate governance represents a hybrid approach to corporate governance and refers to an approach that adopts elements of agency theory and elements of stakeholder theory.

Accepted Answer

A) True 
 B)False

Question 7

A grey director is:

Accepted Answer

A)  a director over the age of 65.
B)  a non-executive director who is independent.
C)  a non-executive director who is not independent.
D)  an alternate director who attends select meetings only.

Question 8

The ASX Corporate Governance Principles and Recommendations are legally enforceable for all listed entities and are an example of hard regulation.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following reforms was introduced in the US Sarbanes-Oxley Act?

Accepted Answer

A)  Increased disclosures for executive remuneration.
B)  Whistleblowing protection for all employees and directors.
C)  Requirements to rotate audit partners every 3 years.
D)  Creation of an entity to oversee auditors.

Question 10

Pluralist systems of corporate governance recognise a broader group of stakeholder interests than agency systems.

Accepted Answer

A) True 
 B)False

Question 11

The finance function of companies is under increasing pressure to produce meaningful information that can be readily understood by part-time directors.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not an example of a hard regulation?

Accepted Answer

A)  Corporations Act.
B)  Trade Practices Act.
C)  ASX Listing Rules.
D)  Accounting standards issued by the Australian Accounting Standards Board.

Question 13

Which of the following is not one of the ASX Corporate Governance Council's principles of good corporate governance?

Accepted Answer

A)  Recognise the interests of all stakeholders.
B)  Structure the board to add value.
C)  Safeguard integrity in financial reporting.
D)  Remunerate fairly and responsibly.

Question 14

According to the ASX Corporate Governance Council's independence test,which of the following is an example of an interest,position association or relationship that might cause doubts as to a director's independence? If the director:

Accepted Answer

A)  is a substantial shareholder of the company.
B)  has been a director of the company for more than 9 years.
C)  has a material contractual relationship with the company.
D)  all of the options are correct.

Question 15

The classic court decision that relates to a director's duty to avoid a conflict of interest is:

Accepted Answer

A)  Aberdeen Railway Co v.Blaikie Bros.
B)  Whitehouse v.Carlton Hotels Ltd.
C)  Woodgate v.Davis.
D)  ASIC v.Rich & Ors.

Question 16

Which is the major theory shaping the corporate governance debate?

Accepted Answer

A)  Stakeholder theory
B)  Class hegemony theory
C)  Team production theory
D)  Agency theory

Question 17

The aims of the Sarbanes-Oxley Act do not include which of the following?

Accepted Answer

A)  Enhancing enforcement tools.
B)  Reducing confidence in the accounting profession.
C)  Improving disclosure and financial reporting.
D)  Improving the 'tone at the top'.

Question 18

The Australian corporate governance system is an example of an agency-dominated Anglo-American system which emphasises shareholder value.

Accepted Answer

A) True 
 B)False

Question 19

How many principles are contained within the ASX Corporate Governance Council's principles of good corporate governance?

Accepted Answer

A)  7
B)  8
C)  10
D)  12

Question 20

Team production theory is a concept that includes elements of both agency theory and stakeholder theory.

Accepted Answer

A) True 
 B)False

Exam 4: Fundamental Concepts of Corporate Governance

Pluralist systems of corporate governance recognise a broader group of stakeholder interests than agency systems.

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Which of the following statement is incorrect?

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Which of the following is not an example of a hard regulation?

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The ASX Corporate Governance Principles and Recommendations are legally enforceable for all listed entities and are an example of hard regulation.

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Which of the following is not one of the ASX Corporate Governance Council's principles of good corporate governance?

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Which of the following was not one of the corporate governance deficiencies that contributed to the collapse of ABC Learning Centres Ltd?

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The classic court decision that relates to a director's duty to avoid a conflict of interest is:

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Team production theory is a concept that includes elements of both agency theory and stakeholder theory.

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According to the ASX Corporate Governance Council's independence test,which of the following is an example of an interest,position association or relationship that might cause doubts as to a director's independence? If the director:

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The Australian corporate governance system is an example of an agency-dominated Anglo-American system which emphasises shareholder value.

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Continuous disclosure requires companies to notify the ASX of any confidential information that a reasonable person would expect to have a material effect on the price of the securities of that entity.

Correct AnswerverifiedShow Answer

The finance function of companies is under increasing pressure to produce meaningful information that can be readily understood by part-time directors.

Correct AnswerverifiedShow Answer

The aims of the Sarbanes-Oxley Act do not include which of the following?

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How many principles are contained within the ASX Corporate Governance Council's principles of good corporate governance?

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Under the insider trading provisions of the Corporations Act,persons are prohibited from communicating information that is likely to have a material effect on a company's share price to anyone they think will deal in the company's shares.

Correct AnswerverifiedShow Answer

Which is the major theory shaping the corporate governance debate?

Correct AnswerverifiedShow Answer

The German system of corporate governance represents a hybrid approach to corporate governance and refers to an approach that adopts elements of agency theory and elements of stakeholder theory.

Correct AnswerverifiedShow Answer

Which of the following reforms was introduced in the US Sarbanes-Oxley Act?

Correct AnswerverifiedShow Answer

A grey director is:

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Which of the following statements do not apply to hard regulation?

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